The following article on Loss Transfer was written by Steven Bedoya, Esq. Steve is an associate in my office where he focuses on workers’ compensation defense.
Background: New York’s No Fault Framework.
A person injured in a motor vehicle accident, has the right to recovery under the New York No Fault Statute. If the person was in the course of their employment at the time of the motor vehicle accident, the Workers’ Compensation insurer becomes the “primary” insurance which is responsible for paying out the lost wages and medical benefits which normally would be the respobsility of the No Fault carrier. See § 5102(1) of the New York Insurance Law.
The Workers’ Compensation carrier can recover benefits issued to the claimant in this situation. See §5105. There is a right to recovery through the process of intercompany loss transfer arbitration for payment of medical and lost wage benefits made by a Workers’ Compensation insurer authorized under § 5105(a) of the Insurance Law.
First, the Law.
The statutory basis for recovery under Insurance Law Section 5105 is explained in § 5102(l), which defines a “compensation provider” to include
“the person, association, corporation or insurance carrier or statutory fund liable under state or federal laws for the payment of workers’ compensation benefits or disability benefits under article nine of the Workers’ Compensation law.”
When Workers’ Compensation insurance provides primary coverage for a motor vehicle accident that occurs in the course of employment, the compensation provider is authorized to pursue recovery for payments made in lieu of No-Fault benefits when authorized under the limited circumstances set forth in Insurance Law § 5105(a). The payments may include medical and health expenses and loss of wages, which are reimbursable as No-Fault benefits under Insurance Law § 5102(a)(1) and (2).
A claimant injured in the course of his employment is entitled to receive Workers’ Compensation benefits. The obligation of the No-Fault carrier to pay No Fault benefits is reduced accordingly. When the total benefits payable by both the Workers’ Compensation and the No Fault carrier reach New York’s basic minimum first party no fault level of $50,000, the injured individual is considered to have maxed out his or her no fault benefits and different rights of the subrogating carrier will attach. The Workers’ Compensation insurer can then look to the No-Fault carrier to recover the “reduced” amount which it paid out to the claimant in benefits.
When the total between the two carriers reaches $50,000 the Workers’ Compensation benefits paid thereafter are no longer in lieu of PIP, but are considered “straight” Workers’ Compensation. The Workers’ Compensation insurance carrier is no longer reducing the amount that the No-Fault carrier would be responsible to pay for. Therefore, it follows that $50,000 is the maximum amount recoverable through loss transfer since that is the maximum amount that the No-Fault carrier would be responsible for in a motor vehicle accident.
Where is Loss transfer litigated?
As discussed above, New York Insurance Law § 5105(a) governs loss transfer in New York State. That statute provides a mechanism for an insurer who has paid first party No- Fault benefits to recover those same payments from the insurer of the at-fault party.
The proceeding to recover loss transfer benefits does not occur in the Workers’ Compensation courts. When you have a matter that qualifies for loss transfer subrogation, the only recourse available pursuant to § 5105 is intercompany Arbitration. All carriers and legal self insureds in New York are required to submit to this arbitration. In pertinent part, New York Insurance Law § 5105(b) states that,
“the sole remedy of any insurer or compensation provider to recover on a claim arising pursuant to subsection(a) hereof, shall be the submission of the controversy to mandatory arbitration pursuant to procedures promulgated or approved by the superintendent. Such procedures shall also be utilized to resolve all disputes arising between insurers concerning their responsibility for the payment of first party benefits.”
What are the requirements for loss transfer recovery?
The first and most important factor is the time limitation involved. The statute of limitations for loss transfer claims is 3 years from the date of each payment. Once the statute of limitations has expired the Workers’ Compensation insurer will have been deemed to waive their right to recover the amount in question.
If the claim is submitted in a timely fashion, the next factor to consider is whether one of the vehicles involved in the accident weighs more than 6500 pounds (the weight requirement) or if one of the vehicles involved is be a vehicle used principally for the transportation of persons for hire (the livery requirement). Although these may seem like straightforward requirements, there are important nuances worth noting when assessing whether a claim will qualify for loss transfer recovery.
With regard to the weight requirement, if any of the vehicles involved in the accident is over 6500 pounds unladen, the accident qualifies for loss transfer. The weight requirement is commonly accepted to mean the actual weight of the vehicle excluding any item that is made part of the vehicle and excludes anything being carried or towed. Therefore, the weight of a trailer towed by the vehicle cannot be used to meet the weight requirement. Evidence which can be submitted to prove the vehicle’s weight includes the vehicle VIN information from the DMV, a certificate of title, certificate of origin; a weight certificate from an official weighing stationor Red Book/Blue Book information. Furthermore, in a situation involving more than 2 vehicles, a third vehicle involved in the accident which meets the weight requirement can be used as a basis for asserting loss transfer jurisdiction and the third vehicle does not even have to be named in the claim! As long as the pleadings set forth that this third vehicle is the basis for bringing the loss transfer claim, that will be deemed sufficient.
The transportation of persons for hire requirement refers to whether the vehicle was used as a livery vehicle. This includes vehicles hired to transport people, such as taxis and buses, and vehicles hired to transport property, such as a tow truck. The vehicle must be shown to be used primarily as a livery vehicle and not simply on the date of the accident. If the vehicle is registered as a regular passenger vehicle but was used as a livery vehicle on the date of loss that must be taken into consideration when applying for loss transfer.
Recovering benefits issued.
A Workers’ Compensation carrier can be an applicant for loss transfer and seek recovery of its payments in an arbitration forum, but a Workers’ Compensation provider cannot be a respondent in the mandatory No-Fault Inter Company Arbitration program! If a claimant is eligible for a workers’ compensation then said compensation provider shall serve as the sole provider of benefits. See New York State Insurance Law Regulation 68 Section 65-3.5; 11 NYCRR 65.
If a claimant in a workers’ compensation claim has received medical and/or indemnity benefits and the accident involved a vehicle over 6,500 pounds or a livery vehicle, the compensation carrier may have a viable claim for loss transfer reimbursement for the first $50,000 of benefits issued.